May 25, 2022

Volume XII, Number 145

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Proposed Federal Legislation Seeks to Ban Targeted Advertising

Last week, Reps. Anna Eshoo (D-CA), Jan Schakowsky (D-IL) and Cory Booker (D-NJ) introduced the Banning Surveillance Advertising Act of 2022, a new bill that seeks to significantly restrict targeted advertising practices. The proposed legislation prohibits “advertising facilitators” (defined as entities who receive consideration for disseminating ads and collect or process personal information in connection with such dissemination) from targeting ads to individuals based on their personal information. In addition, the bill prohibits advertisers from targeting, or using an advertising facilitator to target, ads based on personal information that the advertiser obtained from a third party (i.e., anyone other than the individual to whom such information pertains), or that identifies a person as a member of a protected class. These restrictions also apply to practices that target groups of individuals and groups of connected devices, in addition to an individual person or connected device.

The legislation makes an exception for contextual advertising, meaning that advertisers and advertising facilitators may target an ad based on the particular website that a person is engaging with when such ad is served, or based on a person’s internet search, with the targeted ad displayed along with the search results.  There is also an exception for advertising that is targeted based on a “recognized place” of a person or connected device, which is essentially a geography as defined by the US Census Bureau (e.g., a state, county, town, etc.). More precise location-based targeting is prohibited.

The proposed bill would task the Federal Trade Commission and state attorneys general with enforcement of the law, and grant individuals a private right of action, with an award payment of up to $1,000 per negligent violation and up to $5,000 for a “reckless, knowing, willful, or intentional violation”.

While many commentators believe the bill is unlikely to become law, it is yet another sign of the growing movement to protect consumer privacy and curtail the monetization of personal information. With states contemplating their own version of the California Consumer Protection Act (CCPA), the enactment of the Digital Services Act in the EU, and companies such as Apple moving away from third-party tracking, marketers are likely to explore alternatives to the traditional third-party data model. This may take the form of an increased emphasis on contextual advertising or a focus on collecting data directly from the individual, as opposed to using third party data. For example, brands may spend more resources on leveraging their first party data (consumer data collected directly by the brand, such as through the brand’s website analytics) and zero party data (consumer data voluntarily given by the consumer, such as a response to a survey).

Copyright © 2022, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume XII, Number 28
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About this Author

Genevieve Perez, Sheppard Mullin Law Firm, Emtertainment and Digital Media Attorney
Associate

Genevieve Perez is an associate in the Entertainment and Digital Media Practice Group in the firm's New York office. Genevieve’s practice focuses on transactional matters in the entertainment, technology, media, fashion and advertising fields.

212-653-8700
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